Loan Against Property

What is Loan Against Property:

Loans Against Property (LAPs) are loans offered by banks and financial institutions after mortgaging freehold property, both residential and commercial. These loans are much better options than personal loans or gold loans during times of financial crises or when you need money to expand your business.LAPs are, therefore, one of the most sought-after loans in India and are even more affordable today on account of the competition in the loans-disbursal market. Not just affordable, LAP are also very easy (or simple) to avail and repay. This is so because real-estate is mortgaged when you avail LAP and real-estate prices rarely dip which makes them much more safer.

Characteristics and Details of Loan Against Property

It is a secured loan which means it is offered only when you keep freehold residential property with the bank as security. Personal loan interest rate is allocated according to the customer’s salary, the amount being borrowed, and other criteria.

These are long-tenure loans and repayment periods can be anything from 10 years to 15 years.

The minimum amount for which the loan is offered is Rs. 50,000.

The rate of interest for the loan is based on the customer’s profile, which covers company name, salary, credit history, etc.

Banks also bill the applicant for the administrative charges incurred when processing the application and its processing fee.

Loan Against Property – Eligibility Criteria

Eligibility criterion for banks and other institutions are almost same for salaried professionals, self-employed professionals and self-employed businesspersons. According to the criteria, you:

Should be an Indian national

Should be at least 21 years of age at the time of submitting the loan application

Should have been employed by your current organization or been involved in your business for a certain number of years

Should have the minimum required salary or monthly repaying capacity

Should have submitted EMIs for other loans and made your credit card payments on time for three months prior to submitting the loan application

Loan Against Property – Documents Required

Depending on whether you are salaried, or a self-employed professional, or a self-employed businessman, banks ask for different set of documents when offering an LAP.

The documents to be submitted when applying for an LAP are as follows:

For salaried individuals:

Proof of identity or residence

Latest salary slips

Form-16 issued by present employer

Bank statements of six months preceding the month in which loan is applied for

A cheque covering the administrative costs incurred by the bank in processing the application